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kent

Binary Options

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Learn before you go for live trading account, demo account is best for learning and most of the trading companies provide this facility. After doing training go for live account and choose your trading platform that suits on your strategy and goals.

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Hello Kent,

 

Binary options look good (as its promoted to be and look simple) but it goes directly against every form of effective investing/trading.

The payout on these Binary Options are 70% to 81% ON YOUR INITIAL "INVESTMENT".

This literally means that you will win $70usd to $81usd for every $100usd you put in, If you lose you lose your $100bucks, which in turn means a horrible negative Risk/Reward ratio.

Imagine taking a regular Forex trade where you put your stop at 100 pips away to make only 70 pips on your target. Some traders on these forums don't want to know anything about Risk/Reward ratios and that's ok but i have yet to see anybody making money with a strategy where you can loose more money when you lose then when you can win money when you win.

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Let’s take this a bit further.

 

Let’s say that you see a nice trade in the EUR/USD and you take a short (sell) for example. You put your stop 20 pips above your entry and your target (in case you only work with one target) is 60 pips below your entry price. That is a positive Risk/Reward of 3:1. If you lose you lose 20 , if you win you win 60 pips,......Simple. You can actually lose 2 times this trade and win only one time and still come out ahead, but that’s not all. You can choose to close your trade whenever you feel, you can also close a part of the trade when you get to your target and look for a 2nd target and so on.

 

When you open a Binary option "trade" with let’s say $100usd and the payout is 81% they take your $100usd when you open this trade and pay it back to you when you win + the 81% on that $100usd. Many beginners at this will think that they actually won $181usd but we all know it’s just $81usd. Also when you open a binary option trade you have to wait it out until the hour (or whatever amount of time you choose) is over and get paid or loose. You have no saying over that trade once you are in. When you lose one trade you now have to win the other one to come out ahead, not to speak about a losing streak.

 

And then another thing. As you have probably noticed on all these sites this Binary Options trading is largely promoted to Forex traders as this is a very big retail group where 95% (if not more) of them are losing all their money, ....why would you think that is?

 

I know it all looks easier as you just have to bet (yes this is a wager on a derivative) on an up or down move but don't fall for it. Never take a trade where you can lose more than you can win, the only time in life when you would do that is when you buy a new car that drops in value when you drive it out of the showroom and where you will never get the same money back for it when you want to sell it :(

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I traded binary options with Banc De Binary last year..... was ok at it... Made some money , lost some money . Not really for me ....the thing I did not like about it is that in order to really make make money you have to be right more than 50% of the time. With regular trading this is not the case.....

 

I addition its pretty much an all or nothing bet.........1 point away from your target = loss

 

Now some companies allow you to protect some of your capital .....you can choose to retain some money if you lose but your payout if you win is a lot lower.

 

To me this is gambling. it is like rolling the dice. At least with trading you have the option to get out with small /gain .....I have not really seen any decent strategy that allows for winning .

 

 

As far as demo trading the last time I checked you have to fund and account in order to get a demo.....at least thats how it was last year may have changed since.

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Imagine taking a regular Forex trade where you put your stop at 100 pips away to make only 70 pips on your target. Some traders on these forums don't want to know anything about Risk/Reward ratios and that's ok but i have yet to see anybody making money with a strategy where you can loose more money when you lose then when you can win money when you win.

 

Hi JMB,

 

As a general rule, all else being equal, you'll find that the larger your stop-loss the higher your win-rate. A risk/reward ratio of 10:1 where the stop is ten times the size of the target can push a win rate well above 80%. The converse is also true - as the ratio swings the other way then the win rate will typically decrease below 50%.

 

Consider Trend Followers who have very small stops and (theoretically) very large profit targets. They have a low win rate.

 

Now consider scalping strategies that will risk a full point to make a single tick. They have a high win rate.

 

Correctly compared (disregarding trading frequency etc) neither strategy is inherently more likely to be profitable than the other. So inverse risk/reward ratios are not in my opinion a good reason not to trade binary options.

 

BlueHorseshoe

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Hi JMB,

 

As a general rule, all else being equal, you'll find that the larger your stop-loss the higher your win-rate. A risk/reward ratio of 10:1 where the stop is ten times the size of the target can push a win rate well above 80%.

 

Well,... All else being equal, a Risk/Reward where the stop is 10 times bigger than the target has probably caused for more margin calls than anything else. 80% win rate still means that you win 8 times and lose it all with 2 losses.

 

my :2c:

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Let’s take this a bit further.

 

Let’s say that you see a nice trade in the EUR/USD and you take a short (sell) for example. You put your stop 20 pips above your entry and your target (in case you only work with one target) is 60 pips below your entry price. That is a positive Risk/Reward of 3:1. If you lose you lose 20 , if you win you win 60 pips,......Simple. You can actually lose 2 times this trade and win only one time and still come out ahead, but that’s not all. You can choose to close your trade whenever you feel, you can also close a part of the trade when you get to your target and look for a 2nd target and so on.

 

When you open a Binary option "trade" with let’s say $100usd and the payout is 81% they take your $100usd when you open this trade and pay it back to you when you win + the 81% on that $100usd. Many beginners at this will think that they actually won $181usd but we all know it’s just $81usd. Also when you open a binary option trade you have to wait it out until the hour (or whatever amount of time you choose) is over and get paid or loose. You have no saying over that trade once you are in. When you lose one trade you now have to win the other one to come out ahead, not to speak about a losing streak.

 

And then another thing. As you have probably noticed on all these sites this Binary Options trading is largely promoted to Forex traders as this is a very big retail group where 95% (if not more) of them are losing all their money, ....why would you think that is?

 

I know it all looks easier as you just have to bet (yes this is a wager on a derivative) on an up or down move but don't fall for it. Never take a trade where you can lose more than you can win, the only time in life when you would do that is when you buy a new car that drops in value when you drive it out of the showroom and where you will never get the same money back for it when you want to sell it :(

 

You have your concepts a little backwards,

 

First, $100 binary trade doesn't exist, that would be a trade with 0 probability of closing out of the money.

 

The neat thing about the fixed scale of 0-100 is that:

Probability ITM= total cost - fees

This means as long as your buying OTM (out of money) your risk reward is always in your favor. So if you add any sort of reasonable unfair coin of an edge, you can make money fairly easily.

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    • Date: 17th April 2024. Market News – Appetite for risk-taking remains weak. Economic Indicators & Central Banks:   Stocks, Treasury yields and US Dollar stay firmed. Fed Chair Powell added to the recent sell off. His slightly more hawkish tone further priced out chances for any imminent action and the timing of a cut was pushed out further. He suggested if higher inflation does persist, the Fed will hold rates steady “for as long as needed.” Implied Fed Fund: There remains no real chance for a move on May 1 and at their intraday highs the June implied funds rate future showed only 5 bps, while July reflected only 10 bps. And a full 25 bps was not priced in until November, with 38 bps in cuts seen for 2024. US & EU Economies Diverging: Lagarde says ECB is moving toward rate cuts – if there are no major shocks. UK March CPI inflation falls less than expected. Output price inflation has started to nudge higher, despite another decline in input prices. Together with yesterday’s higher than expected wage numbers, the data will add to the arguments of the hawks at the BoE, which remain very reluctant to contemplate rate cuts. Canada CPI rose 0.6% in March, double the 0.3% February increase BUT core eased. The doors are still open for a possible cut at the next BoC meeting on June 5. IMF revised up its global growth forecast for 2024 with inflation easing, in its new World Economic Outlook. This is consistent with a global soft landing, according to the report. Financial Markets Performance:   USDJPY also inched up to 154.67 on expectations the BoJ will remain accommodative and as the market challenges a perceived 155 red line for MoF intervention. USOIL prices slipped -0.15% to $84.20 per barrel. Gold rose 0.24% to $2389.11 per ounce, a new record closing high as geopolitical risks overshadowed the impacts of rising rates and the stronger dollar. Market Trends:   Wall Street waffled either side of unchanged on the day amid dimming rate cut potential, rising yields, and earnings. The major indexes closed mixed with the Dow up 0.17%, while the S&P500 and NASDAQ lost -0.21% and -0.12%, respectively. Asian stock markets mostly corrected again, with Japanese bourses underperforming and the Nikkei down -1.3%. Mainland China bourses were a notable exception and the CSI 300 rallied 1.4%, but the MSCI Asia Pacific index came close to erasing the gains for this year. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Andria Pichidi Market Analyst HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.vvvvvvv
    • Date: 16th April 2024. Market News – Stocks and currencies sell off; USD up. Economic Indicators & Central Banks:   Stocks and currencies sell off, while the US Dollar picks up haven flows. Treasuries yields spiked again to fresh 2024 peaks before paring losses into the close, post, the stronger than expected retail sales eliciting a broad sell off in the markets. Rates surged as the data pushed rate cut bets further into the future with July now less than a 50-50 chance. Wall Street finished with steep declines led by tech. Stocks opened in the green on a relief trade after Israel repulsed the well advertised attack from Iran on Sunday. But equities turned sharply lower and extended last week’s declines amid the rise in yields. Investor concerns were intensified as Israel threatened retaliation. There’s growing anxiety over earnings even after a big beat from Goldman Sachs. UK labor market data was mixed, as the ILO unemployment rate unexpectedly lifted, while wage growth came in higher than anticipated – The data suggests that the labor market is catching up with the recession. Mixed messages then for the BoE. China grew by 5.3% in Q1 however the numbers are causing a lot of doubts over sustainability of this growth. The bounce came in the first 2 months of the year. In March, growth in retail sales slumped and industrial output decelerated below forecasts, suggesting challenges on the horizon. Today: Germany ZEW, US housing starts & industrial production, Fed Vice Chair Philip Jefferson speech, BOE Bailey speech & IMF outlook. Earnings releases: Morgan Stanley and Bank of America. Financial Markets Performance:   The US Dollar rallied to 106.19 after testing 106.25, gaining against JPY and rising to 154.23, despite intervention risk. Yen traders started to see the 160 mark as the next Resistance level. Gold surged 1.76% to $2386 per ounce amid geopolitical risks and Chinese buying, even as the USD firmed and yields climbed. USOIL is flat at $85 per barrel. Market Trends:   Breaks of key technical levels exacerbated the sell off. Tech was the big loser with the NASDAQ plunging -1.79% to 15,885 while the S&P500 dropped -1.20% to 5061, with the Dow sliding -0.65% to 37,735. The S&P had the biggest 2-day sell off since March 2023. Nikkei and ASX lost -1.9% and -1.8% respectively, and the Hang Seng is down -2.1%. European bourses are down more than -1% and US futures are also in the red. CTA selling tsunami: “Just a few points lower CTAs will for the first time this year start selling in size, to add insult to injury, we are breaking major trend-lines in equities and the gamma stabilizer is totally gone.” Short term CTA threshold levels are kicking in big time according to GS. Medium term is 4873 (most important) while the long term level is at 4605. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Andria Pichidi Market Analyst HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Date: 15th April 2024. Market News – Negative Reversion; Safe Havens Rally. Trading Leveraged Products is risky Economic Indicators & Central Banks:   Markets weigh risk of retaliation cycle in Middle East. Initially the retaliatory strike from Iran on Israel fostered a haven bid, into bonds, gold and other haven assets, as it threatens a wider regional conflict. However, this morning, Oil and Asian equity markets were muted as traders shrugged off fears of a war escalation in the Middle East. Iran said “the matter can be deemed concluded”, and President Joe Biden has called on Israel to exercise restraint following Iran’s drone and missile strike, as part of Washington’s efforts to ease tensions in the Middle East and minimize the likelihood of a widespread regional conflict. New US and UK sanctions banned deliveries of Russian supplies, i.e. key industrial metals, produced after midnight on Friday. Aluminum jumped 9.4%, nickel rose 8.8%, suggesting brokers are bracing for major supply chain disruption. Financial Markets Performance:   The USDIndex fell back from highs over 106 to currently 105.70. The Yen dip against USD to 153.85. USOIL settled lower at 84.50 per barrel and Gold is trading below session highs at currently $2357.92 per ounce. Copper, more liquid and driven by the global economy over recent weeks, was more subdued this morning. Currently at $4.3180. Market Trends:   Asian stock markets traded mixed, but European and US futures are slightly higher after a tough session on Friday and yields have picked up. Mainland China bourses outperformed overnight, after Beijing offered renewed regulatory support. The PBOC meanwhile left the 1-year MLF rate unchanged, while once again draining funds from the system. Nikkei slipped 1% to 39,114.19. On Friday, NASDAQ slumped -1.62% to 16,175, unwinding most of Thursday’s 1.68% jump to a new all-time high at 16,442. The S&P500 fell -1.46% and the Dow dropped 1.24%. Declines were broadbased with all 11 sectors of the S&P finishing in the red. JPMorgan Chase sank 6.5% despite reporting stronger profit in Q1. The nation’s largest bank gave a forecast for a key source of income this year that fell below Wall Street’s estimate, calling for only modest growth. Apple shipments drop by 10% in Q1. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Andria Pichidi Market Analyst HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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